DWAC Options: The WEIRD Thing We See

Published October 25, 2021

Digital World Acquisition Corp. (DWAC) a.k.a. the Trump meme stock that we called early last week, just had another milestone: its options began trading today, October 25, 2021.

And there’s something WEIRD going on… which is how rational the action seems to be. There is nothing amazing or terrible, which means there’s no real reason to trade them.

First, based on the ridiculous explosion in DWAC stock last week, we expected A LOT more volume in DWAC options.

But as of now (12:23 p.m. ET), here’s how many contracts have traded, according to Thinkorswim:

DWAC has graded about 31,000 contracts, basically in-line with other meme stocks, though AMC is an obvious outlier.

Second, DWAC options prices are very expensive – but not crazily so as compared to other meme stocks.

DWAC options expiring on November 19 have implied volatility readings in the 235-240% range. Earlier in the year during the AMC/GameStop initial memestock boom, it was common to see options on meme stocks with implied volatility at 400% or more.

(implied volatility measures how volatile a stock is expected to be, based on options prices)

So what are DWAC options pricing in for the stock?

Well right now DWAC is trading at just about $100.

The $100 straddle expiring on November 19 is priced at $57.

So essentially, trader are betting DWAC will stay between $43 and $157 until November 19.

That would be a ridiculous range for a “normal stock,” but it’s not out of the question for a meme stock.

So what’s the bottom line on DWAC options?

There is nothing particularly crazy going on. And that is VERY weird.

We’d just steer clear…

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
AMC 
$24.47  $0.255 
GME 
$39.44  $0.24 
DWAC 
$29.63  $0.0001 
PHUN 
$1.64  $0.0205 
MARK 
$0.459  $0.081 
DATS 
$1.27  $0.02 
PLTR 
$9.77  $0.1387 
BBBY 
$16.19  $0.1896 
CLF 
$19.52  $0.29 
DNUT 
$14.25  $0.405 
CRSR 
$17.15  $0.17 
NEGG 
$4.08  $0.01 
TSLA 
$941.26  $13.29 
NVDA 
$188.36  $1.96 
AMD 
$100.42  $0.5899 
BBIG 
$0.7117  $0.0000 
SDC 
$1.98  $0.1536 
GREE 
$3.87  $0.7786 
WISH 
$1.63  $0.035 
CEI 
$0.3628  $0.0012 
FAMI 
$1.14  $0.01 
AFRM 
$38.10  $0.325 
CFVI 
$10.13  $0.1083 
>